A New Prescription

If university technology transfer is a patient lying on a gurney on the latest hospital TV drama, the dashing young intern would gaze up at the grizzled M.D. with a confused look on his face to see the venerable doctor shake his head slightly, eyes cast down.

While the life-and-death drama facing the staff at Anywhere General each week may slightly overstate the technology transfer situation at our universities, the critical function of bringing important new technologies from collegiate laboratories to the commercial marketplace is heading for life support. Technologies are slow to market, industry finds the procedures cumbersome and the resulting barriers to economic development are under review by federal agencies and legislators. A Band-Aid approach is not sufficient; aggressive treatment is required. From how professors participate in the process to how universities administer the process to the very process itself, all needs to be addressed over the next several years if we are going to be more successful in transitioning technologies from labs to the market.

We have created 10 prescriptions for technology transfer that may not cure the patient, but would certainly revive it and put it on the solid path to recovery. These steps were determined after consultation with technology transfer and entrepreneurial experts at all levels of Arizona State University. As we move through implementation, we can see some positive results. For example, ASU’s metrics on licensing and startup activities place it in the top ten of institutions with more than $200 million in research expenditures on a cost-adjusted basis.

Prescription 1: Hire skilled people who understand both the university and industrial environments.

Universities generally do an awful job of hiring people into technology transfer offices. They either hire pure academic types who have never patented anything or never participated in a startup or fill their ranks with industry experts with no knowledge of the academic world. Technology transfer offices must hire experts that understand both the university and industry, and can synthesize these two environments effectively.

Prescription 2: Inject speed and flexibility.

Technology transfer offices need to be exactly the opposite of what they are today – which is generally plodding and inflexible. Universities spend too much time negotiating perfect licensing agreements, sometimes taking 18 months to as much as three years to put deals in place. If we can’t improve the speed with which we deliver technologies from the lab to the marketplace, the patient is dead. The focus must shift to deal flow versus the absolute perfect deal.

Prescription 3: Become a service to your faculty and not a revenue machine.

Everyone thinks they are going to get rich from their technologies — the administration, the faculty, the department chairs and the deans. So we set ridiculous revenue goals for our technology transfer offices. This leads to a revolving door of short-term solutions to bring in licensing revenue at the expense of getting technology out the other, more proper door. The result is that we spend an inordinate amount of time on two or three deals and very little time on the 100 other technologies we have because we don’t think they are worth very much. But how do we know what they’re worth? These are primarily inventions at such an early stage it’s almost impossible to quantify their value. So instead of trying to pick the winners early on to meet aggressive revenue goals, it’s time to just get the technology out that door. Turn the attention of the tech transfer people from making money to offering a service to faculty in getting their technologies off the shelf.

Prescription 4: Forget standardized licensing agreements.

Industry sectors differ. Pharmaceuticals differ from other life sciences, which differ from energy, which differs from defense. While promising in theory, the pursuit of the standard agreement only delays the technology transfer process (see Prescription 2). You have to understand the variable parameters of each sector up front. You can’t present the same stock agreement to everyone without understanding the need of each specific marketplace first. Otherwise, when you present a standard agreement, the industry representative says, “This isn’t how we operate.” Then you get down to business and figure it out – wasting valuable time and effort in the process. Figuring out the parameters specific to the industry first, and then introducing flexibility into the approach based on that knowledge, is far more efficient.

Prescription 5: Emphasize sponsored research.

Universities must understand that their greatest source of revenue is more likely going to be sponsored research, not licensing technology. Technology transfer offices will generate more revenue from the $100,000 or $500,000 checks that industry provides to do the research than they’ll derive from licensing the technology produced from that research. Empirical data supports this approach. Our technology transfer offices must focus as much on bringing in sponsored research as they do on licensing technologies and getting them into the marketplace. This is an important shift from current practice, since most technology transfer offices abdicate that role to faculty or the sponsored research office.

Prescription 6: Create venture accelerators.

It’s a simple yet divergent concept that, in the end, universities need to sell a business and not a set of early-stage inventions. Most universities feature a portfolio of nascent inventions that they then license. They don’t know how these new technologies fit into industrial processes, how to finance them, or how to position them for success, but they try to license them and get them into the marketplace anyway. Why not have universities take a little more time with a technology and wrap around it the things that ultimately make it a business? Why not have universities spend a little more time combining some of their technology with other portfolios so that the university markets not the intellectual property but the business concept? And then they can transfer the IP without worrying about its value. It’s a very uncommon concept that universities are reluctant to embrace because there is risk involved. But it is a risk worth taking.

Prescription 7: Establish joint marketing arrangements.

Individual universities must shift from the monolithic view that they are the only ones with viable technologies. There are several hundred other universities that also have viable technologies. Wouldn’t it be great if we could combine portfolios and market those together as opposed to individually? If you are a venture capitalist sitting in Silicon Valley and you want to find out about renewable energy technologies you have to make a lot of calls -- Stanford, Cal-Berkeley, MIT. Then you broaden your search to include UCLA, ASU, Caltech.

At Arizona State, we’ve successfully partnered with other universities to jointly market our combined portfolios. We started with the University of Pennsylvania two years ago, marketing their portfolio as they market ours. ASU also recently teamed with California Institute of Technology, University of California at Los Angeles, and University of Southern California to host a half-day conference for Silicon Valley investors showcasing startups and technologies. Wouldn’t it be nice if investors could contact one consortium, basically make one stop, and find a portfolio of inventions, intellectual property and businesses instead of going from university to university in a complicated search?

Prescription 8: Reward innovation.

The faculty reward system at universities needs to establish more tangible rewards for innovation and entrepreneurship. Unfortunately, our promotion and tenure systems are etched in decades of stone. To propose that a patent is equal to publication or a business fulfills a service requirement is practically impossible. But we still have to push in this area.

Prescription 9: Activate entrepreneurial-minded postdocs.

The most successful universities are taking postdocs interested in entrepreneurship, training them, mentoring them and providing them the opportunity to thrive as entrepreneurs. Faculty must accept that not all postdocs are going to end up in the academy. There are some postdocs that may want to start a business. Is there a better stage in life to pursue that opportunity? We have to identify, educate and train postdocs for these opportunities. At ASU, we are now implementing more programs specifically directed at post docs to encourage and engage them to move university technologies into the marketplace through the entrepreneurial process.

This may sound radical, but universities should require that the P.I.s for grants from agencies or programs such as Advanced Research Projects Agency-Energy go through an entrepreneurial course. A lot of faculty may balk at this -- after all, they have Ph.D.s and are leaders in their fields. What could entrepreneur training really do for them? It could help them tremendously, according to the P.I.s that we put through our Spartan Course at ASU. These senior faculty members said they wished they'd had this type of entrepreneurial training 20 years ago. While they may be the best in their respective scientific fields, P.I.s aren’t trained on how to run businesses, from marketing to manufacturing to management. A little learning can go a long way.

While filling all of these prescriptions may test the established approaches and norms of university technology transfer -- and entire university systems -- this medicine could keep tech transfer out of intensive care and start to put technology where it belongs.

On its feet and in the market place.

R.F. (Rick) Shangraw Jr. is senior vice president in the Office of Knowledge Enterprise Development at Arizona State University. Augustine Cheng is managing director & chief legal officer for Arizona Technology Enterprises at Arizona State.